On April 10, 2012, the GAO released a report (GAO-12-351) entitled Medicare Program Integrity – CMS Continues to strengthen the Screening of Providers and Suppliers. The report focusses on many of the ongoing Medicare program integrity initiatives that CMS has been implementing and that are required by the Patient Protection and Affordable Care Act (“PPACA”).

The GAO specifically looked at Medicare provider enrollment procedures. The GAO report focused on: (1) how CMS and its contractors use provider and supplier enrollment information to prevent improper payments and factors that may affect the usefulness of this information, and (2) the extent to which CMS has implemented new provider and supplier enrollment screening procedures since the enactment of PPACA.

PPACA required significant changes to how CMS processes Medicare provider enrollments, re-enrollments, validation and expansion. These changes were far-reaching and significant. Pursuant to the program integrity requirements in PPACA, CMS has constructed a risk-based system for processing Medicare provider enrollment information. Different types of providers and suppliers are categorized into low, moderate and high risk categories and subjected to different screening procedures as a result of their classification.

Additionally, CMS now screens Medicare claims during the payment process by a series of enrollment-related prepayment edits that check claims against provider and supplier information maintained in PECOS, CMS’ Provider Enrollment, Chain, and Ownership System. The edits are designed to prevent payments to providers and suppliers where data indicate they are ineligible to receive Medicare payment.

The GAO report found that timely and accurate Medicare provider and supplier enrollment information maintained in PECOS is essential to reducing fraud, waste, and abuse and the likelihood of making improper payments. However, the frequency with which updates are made may lead to delays in, or failures to, accurately update information, resulting in payments to ineligible providers or suppliers. As a result of the requirements in PPACA, CMS has begun to supplement its previous enrollment activities with new procedures and contracts that have the potential to improve the accuracy and timeliness of information stored in PECOS. In particular, CMS’ new enrollment screening and site visit contracts shift some provider enrollment activities to centralized national contractors. Ultimately, however, GAO concluded that it is too early to determine whether the new contractors and the agency’s pending action on other PPACA requirements, intended to strengthen provider enrollment standards, will improve program integrity and reduce the likelihood of improper payments.

With that said, there is definitely a new sheriff in town with lots of new tools aimed at preventing improper payments, ferreting out bad actors and increasing Medicare program integrity overall. Even the best providers are beginning to see lots of new questions being asked, significant new paperwork and disclosure requirements and in some cases specific impediments to market expansion.

For more information on the GAO Report, Medicare Program Integrity initiatives or related issues, please feel free to contact Ari Markenson or any member of our health care practice group for a further discussion.

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